Ecobank Transnational Incorporated (ETI) has reported a 179% year-on-year (YoY) increase in post-tax profit, reaching N735.9 billion ($494 million) in its 2024 consolidated financial statement.
The impressive earnings growth was fueled by a surge in both interest and non-interest income, alongside improved cost efficiency. The bank’s pre-tax profit also more than doubled, rising from N376.5 billion in 2023 to N980.7 billion in 2024, highlighting the impact of higher lending activity and increased investments in securities.
Nigeria remained the dominant earnings driver in reported currency, with post-tax profit soaring by 179.3% to N455.7 billion, accounting for 61.9% of ETI’s total profit. However, in constant currency terms, Nigeria’s contribution to the $494 million post-tax profit was just 0.63%, underlining the impact of currency translation adjustments.
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The bank’s gross earnings surged by 130.6% to N4.22 trillion, demonstrating the strength of its diversified revenue streams. Interest income rose by 128.3% to N2.76 trillion, while interest expenses climbed by 122.9% to N1.01 trillion. Net interest income stood at N1.75 trillion, representing a 131.5% growth compared to the previous year. Fees and commission income increased significantly, jumping by 151.8% to N879.9 billion, while expenses on commissions also grew to N98 billion, reflecting a 136.4% rise.
Trading and foreign exchange gains more than doubled, reaching N538.8 billion, contributing significantly to the bank’s overall profitability. Non-interest revenue expanded by 135% to N1.36 trillion, reinforcing the strength of ETI’s diversified income streams. Operating income grew by 133% to N3.11 trillion, while operating expenses rose by 129.2% to N1.65 trillion. The bank’s profit after tax stood at N735.9 billion, marking an increase of 179.3% year-on-year. Basic earnings per share rose to N20.19, up by 166.4% from the previous year.
In terms of assets, ETI reported a total asset base of N43.3 trillion, reflecting a 67.1% increase. Customer deposits grew significantly to N31.64 trillion, up by 66.4% from the previous year, while shareholders’ funds rose by 68.4% to N2.78 trillion.
A deep dive into ETI’s financials shows that core operating income was the key driver behind its remarkable earnings growth. The bank benefitted from both interest and non-interest revenue streams, reinforcing its strong financial position. Interest income remained the largest revenue source, contributing over 65% of total earnings. This was primarily driven by higher lending activity, as ETI expanded loans and advances to customers. The bank also increased its investments in securities, which grew from N6.3 trillion to N10.68 trillion, providing a steady revenue stream despite market fluctuations.
However, this aggressive expansion came at a cost. Impairment charges on loans surged, pushing the bank’s non-performing loan (NPL) ratio to 6.7%. The cost of risk increased to 1.8%, marking the second-highest level in five years. Interest expenses also climbed sharply due to the rising cost of deposits and borrowings in a high-interest-rate environment. The expansion in customer deposits led to higher interest expenses, which rose from N257.2 billion to N559.4 billion. Borrowings nearly tripled to N306 billion, further increasing financing costs.
However, ETI managed to maintain strong net interest income, reflecting its ability to manage lending spreads effectively. Beyond interest income, non-interest revenue also played a crucial role in driving profit growth. The bank saw a significant rise in fees and commissions, driven by increased cash management services and credit-related fees.
Foreign exchange and trading gains also contributed significantly, more than doubling in value. These robust non-interest revenue streams helped cushion the impact of rising costs and bolstered the bank’s overall earnings.
ETI’s ability to contain costs was another major factor in its strong financial performance. The bank reduced its cost-to-income ratio to 53%, marking its best efficiency level in five years despite inflationary pressures and rising operational expenses. This improvement underscores the bank’s efforts to optimize its cost structure while maintaining revenue growth.
In reported currency, Nigeria remained the largest earnings contributor, reinforcing the country’s significance to ETI’s overall financial performance. However, in constant currency terms, its contribution was significantly lower due to the impact of foreign exchange translation.
While ETI’s 2024 financial performance was exceptionally strong, financial analysts have pointed out key challenges to watch moving forward. The bank’s rising impairment charges pose a potential risk, as its aggressive lending strategy has led to higher provisions for bad loans. Managing credit risk will be critical to sustaining profitability in the long run.
Another challenge is the high borrowing cost, as ETI’s borrowings nearly tripled. The bank must strategically manage its funding expenses to maintain profitability in a high-interest-rate environment. Additionally, currency translation risks remain a concern. While Nigeria is the dominant earnings contributor in reported currency, its impact diminishes when adjusted for exchange rate fluctuations.